Wednesday, August 25, 2010
After one of my previous posts, there were a lot of questions/comments that involved funding so I decided to write a two post follow up. This will focus on how/where to look for funding. The next will focus on angel investors that focus on funding biotech companies.
In no particular order:
1. Your Rich Uncle: So many people have mixed feelings on having your wealthy family/friends invest in your company. I have heard entrepreneurs say things like: "Hey whatever helps it get off the ground." If you want to choose this option, then it is completely up to you. Do so with caution. If you go this route you have to be prepared that the relationship you have can go down the tubes. Even if it doesn't go down the tubes, in the event that your business fails you may have undue guilt towards your friend/family member. This is completely a : DO AT YOUR OWN RISK option.
2. Bank Loans (Typically SBA): This is very traditional option. The SBA association will guarantee your loan to the bank. To qualify you usually need to have a business plan, and other information about you personally. It's a great option, especially if you haven't nabbed any other grants or investors.
3. SBIR- Known as Small Business Innovation Research. The NIH also gives grants to small business that is focused on developing life science (and other science) technology. I know many businesses that have received this and have been able to use this to bootstrap themselves into a viable business.
4. Non-profit help- Many non-profits around the country are centered around building up the life science industry in certain areas. A great example is the North Carolina Biotechnology Center
. They might not give your direct funds, but they will direct you to ways you can obtain it locally. Some university campuses do provide ways to get funding and get your feet off the ground.
5. Angel Investor- In my experience Angel Investors are a group of past entrepreneurs that want to help new business thrive, but no longer want to stay up until 2 am every night in order to make your business succeed. They do take on more risk than banks, so they will evaluate your business plan to make sure that it is viable. They usually do not fund as much as venture capitalists, and are usually best to use in the initial stage of your business. Most angel investors are also willing to help you out when you need it and give you guidance. If you can obtain a good angel investor, I recommend going this route.
6. Venture Capitalists- They usually invest in companies that involve some sort of brand new technology. They invest a great deal more than angel investors, but require a larger payout in the end. Unlike angel investors, venture capitalists usually require a lot more attention. They will sit on your board, and tell you how to run your business. However if you have a great product that has a high chance of being acquired in a short amount of time, this is your best option.
Next Post: Best angel investors for Biotech.